Pay increases… we all love them!!!

However, in today’s market compensation increases are often minimal. As an employee, that small increase can quickly dwindle after taxes and deductions. Employers are doing the best job they can at managing expenses; however, they still want to acknowledge and reward their employees. It may be a good time to think outside of the box.

An option some employers forget to consider is adding or increasing employee benefits vs. increasing pay. Benefits still provides tremendous value to employees while helping them minimize taxes and get more ‘bang for their buck’.

Here’s a scenario to consider:

Salary Increase

If you are an employer and provide a salary increase of $1,200 to an employee earning $47,000 per year, the following would happen:

• Value For Employee:  $1,200 pay increase MINUS Canada Pension Plan deductions MINUS Federal Income Tax MINUS Provincial Income Tax. Value to employee:  approx. $700 per year or just $58 per month.

Benefits Increase

However, if the employer invests $1,200 into health benefits, the following would happen:

• Value For Employee: $1,200 more of benefits (e.g. orthodontics, critical illness, etc.). Value to employee: $1,200. More benefits for the buck!

So, if you are an employer considering how you want to reward your employees, sometimes it’s good to consider other options beyond the obvious.

For more information about maximizing the benefit of employee benefits, please contact ENCOMPASS Benefits & HR Solutions.